#CarLoanAdvice #PersonalFinance #FinancialFreedom
Hey Reddit Fam! 👋
So, I’m 32, female, living in a high cost of living area, and making around $120k a year. I’ve got about $30k sitting pretty in my savings account, which I consider my emergency fund. Recently, life threw a curveball at me:
- Last year, I had an accident that totaled my car 😬.
- I bought a shiny new 2024 Toyota Rav 4 for about $35k, putting $18k down, with about $400 monthly payments at a 7.6% interest rate.
- On top of that, I went through a breakup and became a first-time homeowner. Talk about a lot happening all at once!
Currently, I’ve got $10k left on my car loan, and I’m really torn about whether to pay it off or hold onto my cash for emergencies. Here’s what’s on my mind:
– **Interest Pain Point:** I’m paying around $2 a day in interest, which nags at me. That’s $60 a month! 💸
– **Savings Concerns:** I’m nervous about draining my savings too much as a new homeowner. What if something costly pops up? 🏠
So here are my options:
– 🅰️ Pay off the entire $10k now (because I totally can).
– 🅱️ Spill $5k now and save the rest for the spring when I usually get a work bonus (which might be around $8k post-taxes).
Logically, I know I have the means to pay off this high-interest debt, but there’s an emotional tug-of-war happening. 😕 I keep weighing my options and just want to make sure I’m making a smart choice.
So, **here’s where I need your help**: Have you been in a similar situation? What did you end up doing? Any tips on handling the emotional vs. logical decision-making when it comes to high-interest loans? Let’s chat! 💬
I just paid off my car this week and it feels amazing. A very high car payment back in my pocket every month! I say go for it. I also worried about “what if something happens?” But I do have a healthy emergency fund already and without that car payment, I can beef it up quickly. Good luck.
If that’s your highest interest loan, yes, pay it off. That still leaves $20K cash for an emergency fund, and will rebuild pretty quickly with the $400/mo you were paying on your car.
Earn interest, don’t pay it.
IMO, that’s too high (interest rate) – paid with after tax dollars. It should be reduced as soon as you are able. Leave enough in an emergency fund to cover a month’s budget – and pay that thing off.